Council approves tax redistribution

Hilliard City Council members approved legislation during their Dec. 22 meeting that will enable the city to avoid an estimated $1.5-million budget deficit in 2009.

Hilliard City Council members approved legislation during their Dec. 22 meeting that will enable the city to avoid an estimated $1.5-million budget deficit in 2009.

Council members unanimously approved an emergency ordinance that permits municipal income tax revenues to be temporarily redistributed in order to maintain current city services while avoiding an anticipated budget shortfall.

City income tax revenues are currently deposited based on a formula approved in 1985 when the tax rate was increased from 1.5 percent to 2 percent. At that time, it was decided that 62.5 percent of income tax revenues would be dedicated to the general fund, 25 percent would go to capital improvement projects and 12.5 percent would go to the street maintenance fund.

The new ordinance increases the general fund allocation to 70 percent of income tax revenues while decreasing the street maintenance portion to 5 percent.

The capital improvements allocation remains unchanged at 25 percent.

"I think it's important to remember that the regular allocation to capital improvements is 25 percent," Sciotto said. "We have not changed that at all." Finance director Michelle Kelly-Underwood said considerable thought went into the new tax distribution formula.

"I wanted to preserve that (capital improvements funding level) because that is what our rating agencies are used to looking at in terms of our repayment of debt service," Kelly-Underwood said. "The fact that our street improvement, that allocation has decreased, as the mayor has pointed out on several occasions and as you all know, we have spent a tremendous amount of time and energy on our infrastructure in these last five years. We now feel like we can scale back, as presented in our capital improvement projects. We think that's a more accurate picture of how those funds should be allocated for this year."

Sciotto stressed that the reallocation is a temporary, one-year measure intended to help the city deal with current economic conditions.

The new legislation expires on Jan. 1, 2010 and the funding allocations will automatically be reset at the old levels.